Correlation Between Guidemark(r) Small/mid and Western Asset
Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Small/mid and Western Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guidemark(r) Small/mid and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Smallmid Cap and Western Asset Inflation, you can compare the effects of market volatilities on Guidemark(r) Small/mid and Western Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guidemark(r) Small/mid with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Small/mid and Western Asset.
Diversification Opportunities for Guidemark(r) Small/mid and Western Asset
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guidemark(r) and Western is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Guidemark(r) Small/mid is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guidemark Smallmid Cap are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Guidemark(r) Small/mid i.e., Guidemark(r) Small/mid and Western Asset go up and down completely randomly.
Pair Corralation between Guidemark(r) Small/mid and Western Asset
Assuming the 90 days horizon Guidemark Smallmid Cap is expected to under-perform the Western Asset. In addition to that, Guidemark(r) Small/mid is 4.25 times more volatile than Western Asset Inflation. It trades about -0.1 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about 0.18 per unit of volatility. If you would invest 912.00 in Western Asset Inflation on December 30, 2024 and sell it today you would earn a total of 29.00 from holding Western Asset Inflation or generate 3.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Guidemark Smallmid Cap vs. Western Asset Inflation
Performance |
Timeline |
Guidemark Smallmid Cap |
Western Asset Inflation |
Guidemark(r) Small/mid and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guidemark(r) Small/mid and Western Asset
The main advantage of trading using opposite Guidemark(r) Small/mid and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Small/mid position performs unexpectedly, Western Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Asset will offset losses from the drop in Western Asset's long position.Guidemark(r) Small/mid vs. Blue Current Global | Guidemark(r) Small/mid vs. Investec Global Franchise | Guidemark(r) Small/mid vs. Aqr Global Macro | Guidemark(r) Small/mid vs. Ab Global Bond |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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